Washington Pot Shops Open; Banking Still up in the Air
July 8, 2014
July 8, 2014
Washington’s first legal retail marijuana shops scurried to open their doors, after the state’s Liquor Control Board issued 24 licenses Monday.
The issuance of licenses followed the 2012 passage by Washington voters of Initiative 502 (I-502), and an 18-month long process during which the state established tight controls governing the production, processing, and sale of recreational marijuana.
Even with a limited harvest expected until late summer, the retailers declared themselves ready.
Large crowds are expected for the long anticipated opening of the stores, sporting catchy names such as, “The Happy Crop Shoppe,” “Space,” “High Time Station” and “Bud Hut.”
Cannabis City invited media to its “high noon” opening in Seattle and promised an official police “do not cross” ribbon cutting ceremony. Crowd control ordered? Check. Food truck on site? Check. Checking account? “Not yet” is still the answer for most marijuana businesses, which struggle to find a financial institution willing to bank them.
“Our frustration is, we’re paying everything with cash — all of it — from our vendors to our taxes,” said Aaron Nelson, Vice President of Operations at 2020 Solutions, a marijuana retail shop in Bellingham, Washington.
Nelson recently visited more established marijuana businesses in Colorado, the other state where recreational marijuana is legal, partly to brainstorm the banking issue.
Banks and credit unions are generally still uncomfortable with guidance issued by the federal Financial Crimes Enforcement Network (FinCEN) earlier this year. The guidance carries increased due diligence and very specific risk-analysis requirements, making nearly all financial institutions reluctant to offer banking services to the marijuana industry.
The challenge prompted Washington’s Department of Financial Institutions to host a well-attended open forum last month on banking the legal marijuana industry.
“The regulatory agencies presenting at the forum — the DFI, FinCEN and the Liquor Control Board — were confident that providing basic financial services to legal marijuana businesses authorized under I-502 would be relatively safe, and should not require a lot of additional work for the financial institutions serving these businesses,” said John Trull, director of regulatory affairs for the Northwest Credit Union Association.
In late May, Washington Governor Jay Inslee and Colorado Governor John Hickenlooper sent a joint letter to the NCUA, the FDIC, the Federal Reserve and the Comptroller of the Currency. They requested follow up inter-agency guidance to examiners and financial institutions, but no new information has been released by the agencies yet.
Questions about this story? Contact Lynn Heider: 503.350.2225, email@example.com.
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